Tag: Loren Steffy

Loren Steffy and Tom Fox are back for another episode in The Enron Trial series. Here, Loren discusses the atmosphere in the courthouse, and what he observed over the course of the five-month-long trial.

The Trial Begins 
“This was a criminal trial, but it was the trial of the century,” Loren believes; not only due to the company’s popularity, but because prosecution of executives was something that was not often seen. They are very difficult cases to prove, and Enron was no different. 
The Prosecutor’s Strategy 
The prosecutor avoided going into too much accounting detail, and instead kept the focus on the emotional aspect of the trial. “Enron was a great company to work for … People wanted to work there; they thought they were doing all these innovative things. Nobody wanted to lose their position in the company. They didn’t wanna lose their jobs, and they wound up getting caught up in this,” Loren tells Tom. 
The Defence 
The defence had a really tough time. Loren recounts one moment where Kenneth Lay was on the stand and openly questioned his attorney, “A couple of defence attorneys that were providing perspective said, ‘This is the turning point in the case.’ I mean, that was just so devastating that, you know, you just showed the jury that you don’t trust your own lawyer.” Jeffrey Skilling’s legal team employed an unusual tactic of commenting anonymously under Houston Chronicle blogs. In court, screenshots of these comments were actually utilised when the team made a motion to have the trial moved. “It was interesting,” Loren laughs about it. 
The Closing Arguments 
Again, it was less about accounting, and more about the deliberate attempt that was made to bamboozle their shareholders and employees – many people were hurt by it. “It wasn’t just a harmless lie,” said Loren, “there were real world consequences.” 
RESOURCES
Loren Steffy | LinkedIn | Twitter 
 

The five-part series on the Enron Trial kicks off with Tom Fox and actual trial attendee, Loren Steffy. This first episode highlights the major events that led up to the beginning of the trial, many years ago.

Enron in the Early Years 
Enron was once the seventh biggest publicly traded company in America. When natural gas trading was deregulated, Enron made a name for themselves by creating a platform that allowed for easy trade of natural gas contracts. 
The Downfall of Enron 
As Enron grew, they attempted to expand their trading mentality to other markets. There was intense pressure to prove their successes due to being publicly traded, and eventually, they found a way to hide debt and fabricate numbers. However, in mid 2001, their stock began to fall and the questions flooded in. Enron’s lies quickly unraveled, leaving them bankrupt by early December – they went from being the seventh largest company in America, to being broke.
The Arrest and Key Charges 
One of the stunning things about Enron, as a corporate scandal, was that it was really the first time this sort of widespread fraud was seen. In the case of Enron, there were dozens of indictments, but many unindicted co-conspirators. Most of the executives cut plea deals, agreeing to testify against the chairman, Kenneth Lay, and former CEO, Jeffrey Skilling. Though there had been past cases of corporate malfeasance, there had never before been a corporate culture so focused on malfeasance as Enron Corporation. “Looking back at Enron,” Loren says, “it was a culture that really encouraged people to break the rules.” 
Off-the-books Partnerships 
Enron’s partnerships began with an operation called JEDI, done with a small oil and gas company, CODA Energy. Their debt was placed into this entity, and essentially, hidden. This became the model that they used, eventually being done on a larger scale with more interlocking companies passing debt back and forth. A partnership with LJM was where most of the debt was parked. Conflicting documents related to this partnership are what led to the exposure of Enron’s sharp practice.
Other famous partnerships included Enron Broadband, and the Nigerian barge deal. 
Andrew Fastow’s Role 
Andrew was the CFO at Enron, and quite the unusual one, at that. He was more of a behind-the-scenes guy in the company, but became a critical player in the trial. Agreeing to a plea deal, he testified against Lay and Skilling in exchange for a ten year sentence. As an observer in the trial, Loren stated that, “His testimony was very striking. He seemed very sincere in the fact that he believed that the company had done things wrong, and that he had committed crimes.” 
RESOURCES
Loren Steffy | LinkedIn | Twitter